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Medicaid expansion would bring benefits, but at a cost

Gov. Parnell now reviewing Alaska's options under the Affordable Care Act

Posted: July 10, 2012 - 11:01pm

Expansion of the Medicaid low-income health care program in Alaska could bring coverage to tens of thousands of Alaskans, but at an eventual cost of millions of dollars to the state government.

Several Republican governors, including Texas’ Rick Perry, have already said they’ll refused to expand their states’ Medicaid programs, despite the federal government picking up most of the cost.

The federal Patient Protection and Affordable Care Act that was challenged in the U.S. Supreme Court requires states to expand their Medicaid eligibility to 133 percent of federal poverty level.

That could cover as many as 38,000 Alaskans, state officials say.

Alaska Gov. Sean Parnell has spoken of resisting the act’s impact in Alaska, and the June U.S. Supreme Court ruling upholding the act may have given him a way to do so.

The one victory for “Obamacare” opponents in the ruling was a finding that it was unconstitutional for the federal government to coerce states into expanding their Medicaid programs by withholding all federal Medicaid funds if they refuse the expansion.

“That gives Alaska an opening now to reject the expansion,” Parnell said just after the ruling.

“With no penalty we need to rethink what we’re going to do with Medicaid and the requirements that have been imposed by the act,” Parnell told reporters.

It would cost about $300 million per year to do the Medicaid expansion in Alaska, with the federal government picking up 100 percent of the cost for the first three years, with the federal help declining to 90 percent in subsequent years.

“Under Obamacare’s provisions that would require $300 million in new funding,” he said.

The requirement that the state pick up 10 percent of the added amount would add $30 million to the state budget, Parnell pointed out.

And it might be more than that.

“What’s to say that will not grow,” he said.

And Parnell said he’s not even sure the fully funded expansion in the first three years is a good deal for Alaska.

“Free is never free,” he said.

Some in Alaska would like to see Parnell accept the Medicaid expansion, and the federal funding, however.

“I hope he’s taking a really good look at it, it could be really fundamentally important to us,” said Karen Perdue, president and CEO of the Alaska State Hospital and Nursing Home Association.

If people who can’t now pay for their health care were able to do so that would help everyone, she said.

“That would help the business community, that would help insurance rates, that would help costs overall,” Perdue said.

“That is a really important thing, we’re just waiting to see what the governor’s analysis is,” she said.

Parnell’s Commissioner of the Department of Health And Social Services, Bill Streur, is now reviewing the Affordable Care Act in light of the Supreme Court ruling and preparing a recommendation to Parnell on how to proceed.

“Do we want to expand access to health care? Yes,” he said.

But Struer said the Medicaid expansion, and the federal requirements that come with it may not be the way to go, he said.

Despite criticizing federal health care reform efforts, Parnell has also spoken positively of the Medicaid program and noted its importance to thousands of Alaskans.

“That is a valuable program for some of our beneficiaries, no question,” he said.

If Parnell were to reject the federal money, however, it wouldn’t be the first time he’s done so. The 26th Alaska Legislature expanded eligibility for the Denali KidCare program for pregnant women and children, an expansion majority funded by the federal government.

Parnell in 2010 vetoed the $1 million annual state appropriation, saying he’d learned that some of the money would be used for abortions, rejecting federal matching Medicaid money of twice that amount.

A state analysis predicted increasing Denali KidCare would have expanded coverage to 218 pregnant women and 1,277 children.

The Department’s Deputy Director for Health Care Policy, Josh Applebee, said Tuesday the department was working on a recommendation for the governor and was currently trying to get a better idea of what the costs would be. He’d didn’t say when a recommendation would be made.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com

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